The monetary transmission mechanism in Turkey: New developments

Erdem Basci, Ozgur Ozel and Cagri Sarikaya ()

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: The objective of this paper is to study the changes in the monetary policy transmission mechanism in Turkey. The analysis hinges upon both qualitative and quantitative evidence regarding various channels of monetary policy transmission. The arguments about the extent of the exchange rate, interest rate, asset price, credit and expectations channel are based on various studies conducted especially in the aftermath of the February 2001 financial crisis. The paper asserts that the interest rate and the credit channel have an increasingly visible effect on economic activity, while the prominence of the exchange rate channel tends to attenuate in the post-crisis period thanks to prudent fiscal policies and the start of the inflation-targeting regime under floating exchange rates. Furthermore, the improvements in the communication policy increased the ability of the Central Bank of Turkey in managing expectations along with an enhanced credibility.

JEL-codes: E31 E32 E42 E52 E58 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-cba, nep-cwa, nep-mac and nep-mon
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Citations: View citations in EconPapers (7)

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Chapter: The monetary transmission mechanism in Turkey: new developments (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:0704

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